If you have been considering the importance of a personal investment policy statement for the financial future of your family, you might be thinking about starting one.  Creating a Personal Investment Policy can be a lot of work, but it is not rocket science.  You just need to take it a step at a time, and the first step is to figure out your capabilities and limitations. Based upon this honest self-evaluation, you can decide if you should do it alone, or recruit the help of a professional.  

(Here is a quick rundown of some things to think about before you begin.)

Thinking about your personal road map—what are the priorities?

• Before you begin to create your investment policy, it is probably useful to do a personal inventory.  Think about the kinds of tools you have readily available, and the kinds of assistance you might be able to get along the way, either from groups you belong to or professionals.

• Think carefully about your personal skills and knowledge, and the amount of time you have to manage and monitor your investments.  If time or knowledge are a constraint, what are you going to do to address the gaps?

• What professionals do you know that can guide you in this process?  Are you planning to involve them in your planning process, and if so, what are the terms of that involvement?

• Have you got an appropriate infrastructure?  Where are you going to keep your files, and your research?  Do you have access to investment research, or portfolio construction tools?  Do you have a budget for these things, if you are going to need to gain access to them?  Have you evaluated the costs?

• Have you placed a value of your own time?  Have you budgeted that time?

• Before you begin, do a bit of brainstorming.  What are your priorities, ranked in order of importance?  Perhaps score them, so that the difference in the priorities is evident.  How many of these can be managed in tandem? 

• Quickly evaluate your current financial condition before you begin.  You should have a basic idea of your total net worth, liquid net worth, indebtedness and some basic idea of the time horizons associated with priorities above. 

• Now look at the goals and highlight any that are “inelastic.”  An “inelastic” goal is one that has either a financial amount or deadline that is difficult to alter.  Consider the implications of these carefully.

Want to learn more?  We have a white paper on creating an investment policy statement, and a series of pieces to keep you moving in the right direction.  I recommend you start with the white paper. 

We have more content like this coming, if you want to know when they come up, you should follow our social media channels.   We will also curate a lot of other content on this topic and a few similar ones on our Linkedin Channel in 2015..  Connect with us there!